The power of a large buyer

18/01/2007

Does printing industry follow the path of food supply industry?
It may well be the case and there are a few lessons to learn for those who realised it early enough.

Food supply industry example

Let’s go some 150 years back and look at the history of food supply.

First there were food markets. Farmers took produce to the market and sold it themselves. They kept all the profits and did all the work.

Then there came grocery shops, then larger shops and the farms were getting larger. Then there were even larger shops and supply chains until we all ended up with supermarkets and huge supply chains like Wal-Mart, Tesco, ASDA, etc. They drive prices down, compete for the market share and dictate their conditions to their suppliers. It may not look fair, but the consumer is usually the one to benefit from the cheaper prices.

Look at our little NZ produce market. There are 2 major chains: Foodstuffs (43%) and Progressive Enterprises (57%) that reported earning of $132 million before tax for 8 months in 2006. One may say that it is $132 million squeezed out of the suppliers.

Both chains constantly drive the suppliers’ prices down. The consumer benefits as long as there is competition between chains. When one of them gets significantly bigger than the other the competition ends and it all takes a completely different direction.

From food to printing

Looking at where printing is I can say that it’s somewhere comparable to what food supply industry was at the times of grocery stores and a vivid Saturday market.

There are print brokers and there are individual printing businesses selling direct to the customer. This may be no more. The emergence of large print buying groups is changing the whole picture and looks painfully familiar (see the food supply example).

Their weapons

Their weapons are technology and sales people. They are resourceful, they can afford it.
A one-stop-shop offer is hard to resist for businesses because of all the convenience and savings it brings to them. The main beneficiary is the consumer. The main loose is the printer. The man in the middle pockets the money.

The development path of a print buying group usually begins with large corporates and progresses to smaller and smaller businesses. Stream Solutions from Australia is just such example. They are a relatively young company with a very high growth.

Their strength

Stream Solutions are not only about driving the prices down and wedging between the printer and the customer. They are mainly about bringing in so much overlooked efficiency in the process with all the savings involved and passed onto the consumer. The other benefit is brining designers into the process in way that makes it even more efficient for the customers.

Why they won’t be beaten and the printer will loose

Well, not all printers will loose of cause, but the majority will. The reasons are plenty, but there is one word to describe them all: IGNORANCE.

Too many printers seem to think that customers enjoy dealing with them. No, all customers want is to get the job done. The less time and effort they need to invest in it the better.

Too many printers believe that a printing project begins and ends within their premises. No. A printing project begins at the customer’s office and ends when the items are delivered to the final recipient. A lot of printers just don’t get the big picture.

Too many printers are too absorbed in their printing technology completely ignoring the technology that services the customer. Who wants to know that they have a 6 colour-press with the latest cutting and folding add-on and the super-duper ink? The absolute majority of customers are not interested in the process. What important is cost, quality and features of the final product, turnaround and the effort customers need to put in it to have things done.

No time for complacency

The pressure on printers is mounting from all directions, but you may not be noticing yet. The change is not going to happen overnight, but it’s happening right there, right now, right before our eyes. Printers that do not change their ways and do not stop being ignorant about the big picture and the technology to service customers going to be squeezed our by those that do.

On a lighter note …

Did you know that fire drills and false alarms are sponsored by the local café owners?
Why?
Where do you go with your mates during the drill?

There is another theory now …

[youtube=”http://www.youtube.com/watch?v=Wu9KV4wDSV4”]

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